Personal Finance News

Whilst many people will happily switch their credit card balance at the drop of a hat and shop around for a new mortgage deal each time their fixed rate expires, when it comes down to moving their current account it's a different matter entirely.

There are a vast array of current accounts to choose from, some come with enticing rates of credit interest with others offering a more competitive deal for those who sometimes dip 'into the red'.

Despite the best efforts of the marketing departments of the banks and building societies, large numbers of people stick with the current account that they opened when they left college or received their first pay cheque.

So what's the reason for this misguided loyalty? Well, it seems that the main hurdles that providers have to overcome are consumer apathy combined with the perceived hassle involved in transferring your account to pastures new.

When you realise that most of the standard accounts offered by the big high street players are paying a miserly 0.1% interest on your credit balances and charging you almost 30% for an unauthorised overdraft, perhaps a quick maths lesson may give you more of an incentive to 'ditch and switch'.

If you keep an average of £2,000 credit in your current account, you'll receive a paltry £1.60 (after 20% tax) in interest for the entire year, yet if you currently held a similar balance with the Premier Direct account at Alliance & Leicester you'd receive £96 - starting to get interested now?

Maybe you're someone who spends more time overdrawn and therefore not too fussed with credit interest deals; however the 'getting a poor deal' theme is pretty similar. Rather than paying £90 per annum in interest for an average £300 unauthorised debit balance, you could slash the cost to less than £35 with the likes of Cahoot with authorised overdrafts from as low as 11.8% EAR, plus you'd also save yourself a fortune in unauthorised fees and charges.

It's not just those people that have had their accounts with the same institution since the year dot that should seriously consider a better deal, there have been a number of changes in the market recently that may mean the account you switched to in the last six months or so, may have lost some of its sparkle.

Check out the Banking and Savings section on the Moneynet website and find the best current account deal for you.

If this has whetted your appetite and given you some inspiration to go out and find a more suitable current account, there are a few things you need to take into consideration:

• In order to receive some of the more competitive deals, you may be required to fund your account with a minimum amount each month; this typically varies from £500 up to £1,500 per month depending on the account you opt for.
• Beware of packaged accounts where eager bank staff will try to persuade you to opt for one of their accounts with add ons such as mobile phone insurance, car breakdown cover or travel insurance. This sounds quite an attractive proposition until you realise that you'll have to shell out a monthly fee of anything from £6.50 to £25 for the privilege and realise that you could buy your cover cheaper elsewhere anyway.
• An account that offers a high rate of credit interest will often turn out to prove expensive for borrowing and vice versa, so opt for an account that fits your account usage.
• Whilst credit interest of 6% or more sounds appealing, don't forget to check the small print as in many cases these attractive interest rates will only apply to the first £1,000 or £2,500 of your balance.
• It's possible to receive a financial reward for transferring your current account, with First Direct and Alliance & Leicester both currently offering a cash sum of £100 if you switch.

So whilst there has been a general reluctance to switch current account, the financial benefits of picking the right account certainly make it worth some serious consideration.

Remember if you can't be bothered to switch, it will be the banks profits that continue to benefit and that'll be at your expense!

Click here to find the top current account for you

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